I followed this guide:
https://help.ubuntu.com/community/Xen
I managed to get 99% the way through it, but it appears the xen-netboot image doesnt install a virtual kernel (it says 'generic' at the end instead of virtual in grub menu) as shown here:

To run the paravirtualized guest I need to run the 'virtual' kernel I believe. Do I have to manually copy that to the domU somehow (I have it in my dom0's /boot) or is there a way for the vm to install with it?